By Jagdish T. Punjabi | Chartered Accountant
Devendra Jain | Advocate
2 Raj Easow vs. ITO
[TS-155-ITAT-2022 (Mum.)]
A.Y.: 2015-16; Date of order: 8th March, 2022
Section: 54
For the purpose of section 54, it is the date of possession which should be taken as the date of purchase and not the date of registration of agreement for sale
FACTS In May 2011, the assessee, along with his wife booked a residential flat (Flat No 203) in an under construction building named `Bankston’ at Thane (a new house) for a consideration of Rs. 1,40,51,500. In December 2012, the assessee made majority payments to the builders by availing a mortgage/housing loan. Thereafter, on 21st May, 2014, the assessee and his wife, being co-owners holding 50% share, sold a residential house (original house) and utilised the sale proceeds for making repayment of housing loan taken for new house.
In the return of income for A.Y. 2015-16, the assessee claimed a long-term capital gain of Rs. 79,92,015 arising on transfer of original asset as a deduction u/s 54 of the Act. According to the Assessing Officer (AO), the new house was purchased on 15th February, 2012 being the date on which the agreement for sale dated 7th February, 2012 was registered. Since this date was 2 years and 3 months prior to the date of sale of the original house The AO denied the benefit of deduction u/s 54 on the ground that the assessee has not purchased a new residential house within a period specified in section 54, which is one year before
